Growth in pharmaceutical distribution and cold-chain infrastructure is placing greater focus on how healthcare businesses design warehouses and supply chain operations around increasingly complex regulatory requirements.
Australia’s warehouse market is projected to grow from US$3.78 billion in 2025 to US$8.68 billion by 2034, according to IMARC Group, with cold-chain infrastructure and pharmaceutical distribution capacity identified among the segments contributing to that growth.
For healthcare and medical supply chains, however, expanding capacity involves considerations that extend beyond traditional warehouse requirements such as throughput, inventory and fulfilment.
Regulation can influence how facilities are designed, how products move through them and how readily businesses can respond to changing demand.
Regulation shapes warehouse operations
Therapeutic goods supplied in Australia are regulated by the Therapeutic Goods Administration (TGA), with requirements intended to ensure medicines, medical devices and other therapeutic goods meet applicable safety and quality standards.
For supply chain operators, those requirements can translate into different storage, security and handling arrangements depending on the products involved.
Controlled medicines may require secure storage, while other products can require temperature-controlled environments, segregation or specific handling and traceability processes.
These considerations can influence warehouse layouts, material flows and decisions around capacity and automation.
Robert Charles, Chief Operating Officer at ThreeSixty Supply Chain Group, said regulatory requirements need to be considered alongside operational requirements during the early stages of facility planning.
“If regulatory requirements are not considered as part of the facility’s overall design and operational flow from the outset, they can create additional handling, operational bottlenecks and service delays,” Charles said.
“Over time, these inefficiencies can restrict a business’s ability to scale, adapt and respond to growth or changing customer and market demands.”
Capacity constraints can create additional challenges
Regulatory requirements can also affect how healthcare supply chains respond when warehouse capacity becomes constrained.
In other industries, businesses may be able to move excess inventory to another warehouse or engage a third-party logistics provider. For regulated healthcare products, alternative facilities may need to meet specific licensing and operational requirements before inventory can be transferred.
“With TGA licensing, you don’t always have the luxury of outsourcing overflow when your warehouse is full,” Charles said.
“For example, a business that needs to move product out of one facility might not be able to because the receiving site doesn’t hold the necessary licensing to accommodate it.”
The limitation makes capacity and contingency planning particularly important for businesses handling regulated products.
Building compliance into warehouse design
Rather than assessing regulatory requirements after a warehouse layout has been developed, healthcare supply chain planning increasingly requires compliance to be considered alongside throughput, growth and automation from the beginning.
This starts with understanding the requirements of individual products rather than applying a single approach across an entire healthcare category.
A controlled medicine, temperature-sensitive biologic and medical device, for example, can each have different storage and handling requirements.
Quality teams can also play an important role during facility planning. Beyond Australian regulatory requirements, pharmaceutical businesses may operate under internal or international quality frameworks that influence storage and distribution practices.
Material-flow modelling can therefore require more than an assessment of volumes, SKUs and inbound and outbound activity. Security, segregation and traceability requirements may also need to be incorporated into how goods move through a facility.
Testing multiple layouts against the same regulatory and operational requirements can help identify where compliance measures, such as quarantine areas or isolated production spaces, could affect warehouse efficiency.
Automation adds another design consideration
Automation is also becoming an important consideration as healthcare supply chains seek greater fulfilment speed, accuracy and flexibility.
Depending on the product profile and order requirements, technologies including A-frame systems, multi-shuttle systems and automated finishing solutions can form part of healthcare warehouse operations.
However, integrating automation into regulated environments requires consideration of both operational performance and the handling requirements attached to individual products.
Planning automation alongside the initial facility design can also allow businesses to assess how systems will interact with security, segregation, traceability and future capacity requirements.
Designing for changing demand
Flexibility is another consideration as healthcare businesses manage new product launches and changing demand.
Facilities designed primarily around current volumes can become constrained when product mixes or storage requirements change, particularly where expanding into alternative warehouse capacity is limited by regulatory requirements.
Bringing regulation, quality, operational flow, automation and future capacity into the same planning process can therefore help reduce the risk of additional handling and bottlenecks as operations grow.
For healthcare supply chains, regulatory compliance is not simply a requirement applied after a facility has been designed. It can influence the physical and operational structure of the supply chain itself, making early planning increasingly important as pharmaceutical distribution and cold-chain capacity expand across Australia.
Yvette is a Content Producer at Akolade, producing stories for Supply Chain Channel, an Australian learning ecosystem created to address the need for information, networking, case studies, and empowerment for everyone in the supply chain sector.
